Tuesday, 18 December 2012

Instagram Did the Right Thing

The Atlantic:

Truly, the only way to get around the privacy problems inherent in advertising-supported social networks is to pay for services that we value. It's amazing what power we gain in becoming paying customers instead of the product being sold.

Yeah... it's a good point. But in the sea of the free services all around, it's becoming next to impossible to offer a paid consumer-oriented app (or service or whatever). People are increasingly reluctant to pay for such things given the countless alternatives waiting only a tap away.

Here's an alternative version of what Instagram could have done before Facebook purchased them. Instagram has, what, 100 million users? If they got $5 a month from 20 million of those users, they'd be looking at $300 million in quarterly revenue.

Sounds so easy, right? Too bad it just couldn't happen. It's just a quantum leap and you cannot magically convert users to paying customers. Not in numbers of any practical significance.
The fact that Instagram didn't even try doing this speaks for itself.

Hell, if it was so easy, why Facebook bother with crappy ads and struggle to adapt to the mobile era? It could just take $5 / month of 20% of its 1B users. That's 1B / month. Easy money, right? Well, no.